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Prudential Financial Inc. did well in the fourth quarter, but it's trying to harden itself against current and future financial storms.
Executives at the Newark, New Jersey-based company said the company's is already making adjustments to counter the effects of low interest rates.
(Related: Principal Posts Strong Life Sales: Earnings)
The company is also working to cut costs, and to reduce the exposure of annuity operations to changes in stock prices.
At the U.S. individual annuity operation, "gross sales of $2.1 billion in the current quarter reflect our continued diversification strategy, with 65% of sales coming from less equity-market-sensitive products," Prudential says.
Executives talked about the company's financial risk-management efforts Tuesday, when they announced earnings for the fourth quarter of 2019.
Resources
The U.S. Securities and Exchange Commission's Fast Search company filing search tool is available here. Enter the company's stock symbol (such as, PRU, for Prudential) in the search form to see the official earnings filings.
Prudential as a whole is reporting $1.1 billion in net income for the fourth quarter of 2019 on $17.5 billion in revenue, compared with $849 million in net income on $17.8 billion in revenue for the fourth quarter of 2018.
The U.S. individual solutions division is reporting $508 million in adjusted operating income before income taxes on $2.8 billion in revenue, up from $419 million in adjusted operating income before income taxes on $2.7 billion in revenue.
U.S. individual premiums fell to $268 million, from $306 million, but net investment income increased to $806 million, from $700 million.
Individual Life
Prudential's U.S. individual life business is reporting $58 million in adjusted operating income before income taxes on $1.6 billion in revenue, compared with a $26 million adjusted operating loss before income taxes on $1.5 billion in revenue for the year-earlier quarter.
Here's what happened to sales of key life products between the fourth quarter of 2018 and the fourth quarter of 2019:
- Term Life: $47 million (down from $55 million)
- Guaranteed Universal Life: $26 million (down from $29 million)
- Other Universal Life: $42 million (down from $51 million)
- Variable Life: $94 million (up from $58 million)
Sales through Prudential's own advisors increased to $40 million, from $37 million.
Sales through outside distributors increased to $169 million, from $156 million.
Individual Annuities
Prudential's U.S. individual annuities business is reporting $450 million in adjusted operating income before income taxes on $1.2 billion in revenue, compared with $445 million in adjusted operating income before income taxes on $1.2 billion in revenue.
Variable annuity sales fell to $1.9 billion, from $2 billion.
Sales of variable annuities other than the Highest Daily Suite products increased to $1.1 billion, from $1 billion.
Fixed annuity sales increased to $223 million, from $189 million.
Here's what happened to sales through specific distribution channels between the fourth quarter of 2018 and the fourth quarter of 2019:
- Insurance Agents: $676 million (down from $684 million)
- Wirehouses: $310 million (down from $430 million)
- Independent Marketing Organizations: $30 million (up from none)
- Independent Financial Planners: $904 million (down from $974 million)
- Banks: $161 million ( up from $150 million)
Aflac Inc. (NYSE:AFL)
Aflac is reporting $782 million in net income for the fourth quarter of 2019 on $5.6 billion in revenue, up from $525 million in net income on $5.1 billion in revenue for the fourth quarter of 2018.
Aflac has large operations in Japan.
The Columbus, Georgia-based company's Aflac U.S. unit, is reporting $275 million in pretax adjusted operating earnings on $1.6 billion in revenue, compared with $274 million in pretax adjusted operating earnings on $1.6 billion in revenue for the year-earlier quarter.
New annualized premiums from sales of the company's flagship accident insurance product fell to $148 million, from $154 million. Sales of hospital indemnity insurance increased to $97 million, from $91 million.
